Treasury Note Builds Pressure While JGBs Lose Momentum

Treasury Note (10-Year)

Short-term Technical Outlook

Typically, the more mature a congestion pattern on a normally active security, the greater the potential for a breakout. There is no exception for the benchmark T-note; but conditions are not primed for a break that develops into a new trend. Instead, we can see the gradual, rising trendline from this past February’s low now at 122 and the recent swing high below 124 is encompassed by the far more prominent 124-17 and 122 levels range boundaries. So, considering the technical influence these outer bands have, market forces will have to work twice as hard to jump start a new trend that catches the broader market unawares.
 

UK Gilt (10-Year)

Short-term Technical Outlook

The Gilt’s 11-month, rising trendline is still exerting its influence over price action; but curbing the March bearish reversal has not translated into a generator for momentum. Instead, we have seen futures struggle to make headway. Last week’s candle closed with a bearish reversal that held the market well back from making another test of 124.75. Reaching this level could put us between the chances for a true trend revival or complete a potential head-and-shoulders reversal pattern. Instead, the longer the Gilt struggle to redevelop at least a temporary bullish push, the greater the probability the market will finally call an end to the market’s lingering bullish bias.
 

German Bund (10-Year)

Short-term Technical Outlook

While we are still quite a ways from the bund’s major range boundaries (124.75 and 121.50), we can still see congestion at work. Since tearing through unstable technical floors to skew the market’s layout, we have seen a divided market form the clearest technical bounds for price action that we have seen in nearly a month. As a notable Fib confluence and obvious pivot point, 123 holds influence over price action – but as a general line in the sand rather than a hardfast resistance point. The same goes for loose series of daily lows in the 121.60/75 area. A break from either of these figures would be good for short-term follow through; but with a buffer zone and more influential levels wider out; such a move is not a good place to jump in for a new, long-term trend.
 

Japanese Government Bond (10-Year)

Short-term Technical Outlook

It was a good run for the Japanese Government Bond. The benchmark 10-year note tumbled from 139.60 to 136.50 before losing its momentum this past week. The market has turned back to the chop that has become so familiar over the past four months. However, the circumstances have changed for this market. Finally breaking out of its broad range, this market has once again taken on the character of a new range. Reviving the trend from this point would not be difficult; so it will be important to remain wary of developments in price action and volatility over the coming week. 

Written by: John Kicklighter, Strategist for CFDTrading.com
Questions? Comments? You can send them to jkicklighter@cfdtrading.com